TORONTO -- Premier Dalton McGuinty likely
knew he was getting a poor deal for taxpayers in 2004 when
he signed the contract to establish Ontario’s first
public-private-partnership hospital.
Documents recently released as a result of a
four-year court case reveal that the public sector
comparator used to justify the deal was overinflated by $300
to $400 million, falsely making the P3 project look like a
viable alternative to public financing.
The actual deal could cost taxpayers as much
as $300 million more than if the William Osler Healthcare
Centre had been built under the traditional public model.
Detailed criticism of the public sector
comparator by Deloitte and Touche was in the Premier’s hands
prior to finalizing deals for two P3 hospitals – the Royal
Ottawa Hospital and William Olser Health Care Centre in
Brampton. During the 2003 election campaign McGuinty had
initially opposed the then Tory plan to establish the two
privatized hospitals, claiming he would make them public if
elected.
Despite minor penalties associated with canceling
the deals, the McGuinty government reneged on his promise and signed
deals with few differences than those set up by his predecessor.
OPSEU, together with the Ontario Health Coalition,
CUPE, and SEIU Local 1.on, had initiated the court challenge in 2003
to get the details held secret until now.
“So far, the WOHC P3 has had cost increases, space
decreases, flexibility decreases – and all of this with little
transparency in the various early stages of the project,” said Lewis
Auerbach, a former director with Audit Operations, Auditor General
of Canada, at a media conference in Queen’s Park on May 9.
Steven Shrybman, who fought the case on behalf of
the unions and the health coalition, said the Osler P3 represents a
serious betrayal of the government’s obligation to manage the public
purse, and to ensure hospital services are provided in an efficient
and transparent manner.
The documents reveal that the total estimated cost
of the Osler hospital will be $2.7 billion over 25 years. The higher
cost of borrowing undertaken by the private consortium adds $94
million in additional interest charges over the life of the
contract. $299 million is forecast to be paid out in dividends paid
to equity partners, while only $7 million is expected to be paid by
the consortia in taxes thanks to an extraordinary deal with the
province.
Despite claims that P3 hospitals are more likely to
come in on time and on budget, the Osler hospital has failed to
accomplish either goal. The hospital is now significantly behind
deadlines, is much smaller than originally projected, and costs have
almost doubled the original estimates.
Initiated in September 2003, the legal challenge
argued that the commercial and investment structure of the P3 will
undermine the ability of the hospital to properly manage and
supervise; the scheme accords a private consortium unprecedented
control over the delivery of publicly funded hospital services; it
was unreasonable to publicly fund a scheme that was more costly but
offers no advantage over the conventional model of public funding;
and it was improper to fund the P3 scheme without public disclosure.
The three unions and the Ontario Health Coalition
are asking for a moratorium on all new P3 projects until the
provincial auditor has had an opportunity to review the deals. They
are also demanding the government make public other secret deals to
establish P3 hospitals, including the Royal Ottawa Hospital and the
North Bay Hospital.
“P3 projects are thoroughly discredited and in
decline in almost every jurisdiction, so we wonder why the Ontario
government is continuing with these risky and expensive hospital
projects,” says OPSEU President Warren Smokey Thomas. “Hospitals
built in Ontario should be fully owned, financed and operated by the
public sector.”
